Massive Shopping Mall in Chiang Mai Still Going Ahead !

ECC Group, a Netherlands-based retail developer, strongly believes Chiang Mai has room for up to two retail newcomers and that the company will achieve success as one of these operators.

CEO Tjeert Kwant recently said Chiang Mai had been developed in many respects such as residential projects, hotels and resorts and entertainment business over the past decade - but not so in the shopping-mall sector.

Only Central Retail Corp had announced plans to add another mall in Chiang Mai, while plenty of property developers, tourism and entertainment operators have continued to arrive in the northern city.

ECC Group early this year announced a plan to invest Bt3.1 billion to build the Promenada Chiang Mai shopping mall in the province. The plan remains on track despite the uncertain economic situation.

The company is adapting its latest design to accommodate local residents' requirements. Construction is expected to start in the final quarter of this year or the first quarter of 2010, said Kwant.

Central Retail Corp operates two Shopping Malls in Chiang Mai - Central Airport Plaza and Central Kad Suan Kaew Department Store. The company had planned to create new malls in Chiang Mai and Chiang Rai this year, but this was deferred due to gloomy economic situation.

ECC Group is encouraged by the fact that developers such as Land and Houses have constructed many residential projects in Chiang Mai. Besides, there are many foreign companies established in the city. For example, one overseas movie production firm recently announced plans set up a studio.

So, the Dutch group believes the city in the near future will again attract many tourists and plenty of money.

In addition, Chiang Mai has as international airport, with many airlines flying directly to the province. Many Bangkokians also go to Chiang Mai in the holidays. More than 4 million tourists travel to Chiang Mai each year.

"It's a little bit confusing about Chiang Mai. It is the second-largest city in Thailand and many businesses are established there, but not for retail business. Most retailers are interested in expanding their malls in Bangkok, Pattaya and Phuket only. Now there are a lot of foreigners, both expatriates and tourists, in Chiang Mai.

"Therefore, Chiang Mai is big enough and ECC Group is confident that there is an opportunity for other retailers to enter this market," Kwant said.

He said the group had established an office in Chiang Mai in 2006, after which it began to conduct market research in the city. It found that retail business growth in Chiang Mai over the past couple of years had been about 5 per cent per annum. When the economy recovers, sales growth per year may reach 10 per cent, he added.

Kwant said it was, however, hard to predict growth in this business in the near future because many factors - not least the global economic crisis and the Bangkok airport closures at the end of last year - have affected retail business in Chiang Mai, with many tourists steering clear of Thailand.

ECC Group is designing the Promenada shopping mall to have a higher proportion of local entrepreneurs than existing malls, as this fits the needs of the local population. The proportion of brand-name products and local ones will be 60:40, with the company's priority target group being local people.

Kwant said the retail business in Thailand was more dependent on tourists than ECC's shopping malls in Central and Eastern Europe. This may be a weakness amid the global economic crisis and the uncertain political situation.

He said Thai retail sales over the past six months had dropped by 20-25 per cent, whereas in the Polish capital Warsaw, where ECC Group operates a Promenada shopping mall, its sales had declined by only 4-5 per cent.

"About 95 per cent of our clients in Poland are local residents. People in Poland may pay less for luxury goods amid the economic crisis, but they still have to pay for essential goods. So, our sales show only a slight drop," he said.

He added that focusing on tourists, however, could turn out to be strength for retail businesses in Thailand when the global economy recovers, because the country is recognised internationally as one of the best shopping destinations in the world.

The key to the ECC Group's retail success in Central and Eastern Europe, where it is the leader in some countries, is its cooperation with local partners, companies and individuals, plus dedication and listening to the local people's requirements.

These factors will also be crucial to a successful operation in Chiang Mai, said Kwant.

"We're the newcomer that brings new things to locals. We always cooperate with local parties such as manufacturers, partners and individuals and do everything to meet their requirements.

Moreover, dedication is another factor leading us to success.

"We cannot operate our shopping operation from Europe. I've already moved to live in Thailand. So, these factors will bring us success," he said.

Source: The Nation - 6th May 2009